Region's homebuyers run a trying marathon

Many hindered by curbs on growth, soaring prices

Susan and Paul Tanenholz begin their search for a new house each morning amid diaper changes and bottle feedings for their three infant daughters.

Paul Tanenholz turns on his laptop at 7 a.m. and downloads his e-mails to see if a house they might like has reached the market. Each day, excitement and frustration engulf the crowded Ellicott City townhouse as the young family seeks the larger home it urgently needs.

"I thought it would be a lot easier to find a house," says Susan Tanenholz, 33, of their seven-month search.

The Tanenholz family is running hard in a grueling housing marathon that has captured hundreds of others across the Baltimore region.

That frequently futile pursuit of a limited supply of increasingly expensive homes is threatening dreams of a better life for many of these families. And it is threatening to upset the social and economic equilibrium of communities across the region.

During the past two years, housing prices have been rising much faster than incomes, confronting families with challenging choices as they search for the right house, neighborhood and school.

The fast-growing gap in the Baltimore area has been charted in an index compiled by Economy.com in West Chester, Pa.

"Affordability is an issue," said Celia Chen, a senior economist at Economy.com, who studied the figures.

Experts said prices are up in the Baltimore region in part because of its proximity to Washington and lots of slump-proof federal government jobs. The lowest mortgage rates in four decades have added more anxious shoppers to the mix. In short, a lot of people here are chasing a small supply of expensive houses.

The home search frustration has been particularly acute among workers such as teachers, firefighters and police officers, who are often unable to live in the communities where they work and find themselves making longer commutes.

The average home price in Baltimore and its five surrounding counties, $210,000, is more than 10 percent higher than it was at this time last year. The average price rose by double digits in every jurisdiction last month compared with September last year except in Anne Arundel County, where the average increased 6.6 percent, to $280,470.

Those fast-climbing numbers have local leaders from Harford to Howard fretting over what to do about the growing shortage of affordable housing. Gov. Robert L. Ehrlich Jr. has formed a committee to study the issue. Members of the group will be discussing the problem with housing industry leaders during a conference Thursday at the University of Maryland.

Feeding the problem is a widespread suburban debate over the environmental and economic costs of rapid growth. Concerns about the pace of development have led counties to limit local development, pushing prices higher and further frustrating families that urgently need homes.

Controls in Carroll County have limited the supply of housing there. Concerns about too much growth in Harford and Baltimore counties have dominated public discussion there. In Howard County, the demand for homes because of the quality of the schools has pushed prices to all-time highs.

"I've looked at about more than a dozen houses," says Brenda Hubbard, an assistant principal at Arundel Elementary Middle School who is shopping for a new home in Baltimore County. "I got a little discouraged because the prices were ridiculous."

"We're in a crisis right now," said John Kortecamp, vice president and chief executive officer of the Home Builders Association of Maryland, which has been critical of the state's development controls. "You have to talk to people who are priced out of the market now to understand that."

Particularly worrisome to some observers, much of the housing affordability gap has been masked by the lowest mortgage interest rates in decades.

When mortgage rates go up, as they are almost certain to do, the squeeze on families seeking better housing is likely to significantly increase. The National Association of Realtors estimates that up to 300,000 fewer homes are sold when interest rates increase by 1 percentage point.

Even with those predictions, real estate professionals said it remains common for buyers to increase the price they're willing to pay several times because of the demand. With a limited supply of new and older homes on the market, the prices keep climbing.

"In many cases, you either change your perspective or you don't find a house," said David Horvath, a loan officer with Peoples Mortgage Corp. in Severna Park.

The challenge of finding an affordable house is toughest for families just starting out or those with special needs. It's a particular concern to the real estate industry, which is counting on first-time buyers, single women and minorities to be the fastest-growing segment of homebuyers in coming years.